The Wall Street Journal
Bosses Show More Flexibility About Relocation Rising Demand for C-Suite Players Makes Firms More Willing to Accommodate
By Joann S. Lublin
Sept. 30, 2014
When a top boss lives far from headquarters, companies are willing to go the distance—literally—to simplify life for the executive.
Mark King needed to move fast after Adidas AG promoted him to run North America with scant notice last spring. He left his newly built home in Vista, Calif., packed half his clothes and rented a furnished apartment in Portland, Ore. In return, the sporting-goods giant gave Mr. King a sweet relocation deal: $100,000 to cover his first year of rent.
"They made it easy for me," the executive says.
Facing increased demand for critical C-suite players, many employers are trying harder to accommodate executives wary about a distant job, recruiters and relocation specialists say. Companies once required new or transferred bosses to move near headquarters, but now many offer lump-sum payments, lengthy temporary housing or a satellite office near the individual's residence. Some businesses even move their headquarters to snag a desired boss.
About 75% of executives reject an opportunity requiring a move, according to Peter D. Crist, chairman of recruiters Crist/Kolder Associates.
Turndowns frequently occur because executives have families with complex needs, such as an employed spouse, adolescent offspring, aging parents or health issues, says Melanie Kusin, a vice chairman of recruiters Korn/Ferry International . "Relocation issues have risen significantly over the past five years" due to families' increasingly complicated situations, she adds.
Accommodating reluctant transfers isn't cheap. Richard Dowd, president of Dowd Associates Executive Search, sought a senior vice president of finance last spring for a midsize concern in the media industry. A Midwestern prospect hesitated to take the position, located in the South, because she would have had to move for the second time within a year.
"She wanted a guarantee that her house would be bought for a certain price" by the new employer, Mr. Dowd recalls. He says the company more than covered her possible home-sale loss by significantly expanding her cash signing bonus. She started work in August, and has moved.
Humana Inc. recruited Bruce D. Broussard in 2011, partly by promising its new president nearly two years of temporary housing allowances and corporate flights for his long-distance commute from Houston. The former McKesson Corp. executive then had a child in high school.
The Louisville, Ky., health insurer spent about $800,000 for Mr. Broussard's lengthy transfer, regulatory filings show. His housing subsidy and free flights ended in August 2013, seven months after he took over the corner office. "Bruce is the first CEO in Humana's recent history who was not already resident in Louisville," a Humana spokesman says.
Company policies typically cover executives' temporary housing for up to 90 days, says Heidi Skatrud, a vice president of Runzheimer International, which advises businesses on relocations. But in the last few years, she notes, "the extreme commuter in the executive role has been tolerated for a longer period."
Hill-Rom Holdings Inc. pledged to spend $200,000 relocating its new chief John Greisch —including six months of temporary housing. There was a catch: He had to buy a home within 75 miles of the Batesville, Ind., headquarters of the medical-technology company, his January 2010 employment agreement stated.
Mr. Greisch, a former Baxter International Inc. executive who lived in Northbrook, Ill., never moved. He and key senior officers work in a Chicago office that Hill-Rom established in October 2010.
The CEO and his colleagues spend a lot of time traveling to the company's more than 100 locations world-wide, a Hill-Rom spokesman notes. The Chicago office offers access to an international hub and "a broader pool of talent with global experience," he adds. Mr. Greisch declined to comment.
NCR Corp. directors are equally pleased that they ignored a contractual relocation requirement for Chief Executive Bill Nuti, a resident of New York's suburban Long Island. They could have fired him for cause if he and his family didn't relocate to the technology company's Dayton, Ohio, headquarters by August 2006.
Mr. Nuti says he couldn't move, citing his wife's ill health. He still runs NCR from Manhattan, and the company now operates from Duluth, Ga. The board decided "the CEO's location was irrelevant to the company's success," says Linda Fayne Levinson, a veteran director.
Serving an executive's unusual residential needs may take an internal toll. J.C. Penney Co. Chief Executive Ron Johnson kept living in the San Francisco Bay area rather than relocate to the company's Plano, Texas, headquarters. The arrangement bothered headquarters employees, but "there is no privilege to leaving your family at home, traveling by plane and staying in hotels," says a person familiar with his thinking. The retailer dumped Mr. Johnson last year after 17 months.
Headquarters managers outside the C-suite also risk being passed over for promotions due to their scant face time with the boss, says Deborah Cornwall, managing director of Corlund Group LLC, a leadership and governance consultancy. "They have to come up with new ways of working so they will be seen."
Deerfield, Ill.-based Cosi Inc. went even further to land RJ Dourney this year as head of the struggling sandwich chain. Mr. Dourney says he didn't want to leave Boston because he had already relocated nine times in 20 years.
Board members asked him, "'What will it take? What do you need?'" recollects Mr. Dourney, Cosi's biggest franchisee. His reply: Move headquarters to Boston.
Chairman Mark Demilio says the board was already mulling various East Coast locations but might have granted Mr. Dourney's Boston request anyhow because he's "uniquely qualified to lead the company.'' Cosi moved July 1.
Eight Deerfield staffers remained with the company, and about 30 others were laid off or accepted buyout packages, Mr. Dourney says.
When Gardner Denver Inc., a maker of pumps and other industrial products in Wayne, Pa., hired Tim Sullivan as CEO last year, the longtime Milwaukee resident opposed leaving town.
So Gardner Denver let him split his time between a new Milwaukee office and Wayne. In April, the CEO announced he would shift headquarters to Milwaukee.
He quit June 4, weeks before the headquarters move was completed.
Mr. Sullivan declined to comment. His successor Peter Wallace, a Florida resident, works in Milwaukee full-time, a person familiar with the matter says. Gardner Denver won't create a Florida office for its latest leader, the person adds.
Corrections & Amplifications
The name of the chief executive of Humana is Bruce D. Broussard. A previous version of this article incorrectly gave his first name as Michael.